The yen reached its lowest level against the dollar in two decades on Wednesday, extending a recent decline as the gap between Japan’s monetary policy and US austerity widened.
Despite traditionally being considered a safe currency, the uncertainty fueled by the war in Ukraine has not strengthened the yen.
Instead, the US Federal Reserve’s move towards a more aggressive policy and the shock of rising oil prices in Japan – a major importer of fossil fuels – have pushed the currency down, experts say.
One dollar bought 126 yen on Wednesday afternoon, the lowest rate since 2002.
“The Japanese yen has been one of the weakest currencies anywhere in the world this year,” the Dutch banking group ING said in a recent comment.
“Running the rally has been the perfect storm for the hawkish Central Bank, Japan’s pigeon bank. [BoJ]and Japan’s negative trade terms as a major importer of fossil fuels. “
Government spokesman Hirokazu Matsuno said “exchange rate stability is important and we believe that rapid currency movements are undesirable.
“We will monitor the development of the foreign exchange market and the impact on the Japanese economy with an urgent sense,” he added.
The yen had already lost 10% of its value against the dollar by 2021 after a four-year steady strengthening.
The US Federal Reserve has taken an aggressive stance and pushed for US Treasury yields, which have strengthened the dollar against the yen.
But its measures run counter to the Bank of Japan’s superfluous monetary policy, which will be maintained for the time being, Governor Haruhiko Kuroda said earlier on Wednesday.
“Given the economic and price situation, the Bank of Japan will seek to achieve its two percent inflation target … by continuing the current strong monetary easing,” he said.
The Swiss bank UBS said that a weaker yen would likely hurt the purchasing power of Japanese households and domestic small businesses, which would face higher import costs.
“The government offers fiscal support and is likely to increase support. We believe that [yen] Purchase exchanges are possible if the depreciation rate is considered too high, “says a comment.
Tohru Sasaki, head of Japanese market research at JPMorgan Chase Bank, told AFP that Bank of Japan “must do something to slow the yen’s depreciation.
“The Japanese government can sell foreign exchange reserves [USD] to intervene, but it is politically difficult, “he said, adding that it would be” strange “if the Ministry of Finance did so while the Bank of Japan maintained its current austerity policy.
The yen depreciated to a 20-year low against the dollar
Source link The yen depreciated to a 20-year low against the dollar